UK Cloud Regulations: A Turning Point for Microsoft and Amazon

The UK is aiming to bolster its regulatory control over cloud computing services like Microsoft and Amazon Web Services to more effectively govern these pervasive tech giants.

UK Positions Itself in Cloud Giant Regulation

The UK’s Competition and Markets Authority (CMA) has released its preliminary findings on the cloud services market, concluding after a 16-month investigation that the market is “not functioning as well as it should.”

Amazon and Microsoft Under Scrutiny

Amazon Web Services (AWS) and Microsoft, the two leading cloud service providers, hold 30 to 40% of the market share, followed by Google with 5 to 10%. The CMA identifies “technical and commercial barriers” that hinder customers from easily switching providers, particularly due to data transfer fees.

Entry Barriers and Hidden Costs

The CMA also notes significant challenges for alternative cloud service providers trying to enter and expand in the market. It highlights Microsoft’s use of its extensive software presence to limit the competitiveness of AWS and Google for clients wishing to use this software in the cloud.

Furthermore, the growth in spending by British companies and organizations on cloud services, increasing by 30% annually to reach £9 billion in 2023, could be impeded by additional costs. If prices were just 5% higher than in a “well-functioning market,” it would cost an extra £430 million per year.

Towards New Regulation?

The CMA suggests a solution: granting AWS and Microsoft’s cloud services a “Strategic Market Status” (SMS), a designation created by the new British Digital Markets, Competition, and Consumer Act (DMCC), which would allow the CMA to impose stricter regulations and guidelines to promote competition. Similar investigations are also ongoing regarding Google and Apple.

The debate on regulating digital giants is far from over.